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<p>[QUOTE=&quot;NorthKorea, post: 1184513, member: 29643&quot;]A cashless society would be developed in waves. The first wave will come to an end when transactions direct from transactional accounts exceeds transactions from credit accounts. Japan exited the first wave around when the real estate bubble tanked most Japanese investment portfolios in the late-80s/early-90s. The United States is going through a similar overhaul. China should experience a similar dynamic in around 10-25 years (either 10-15 or 20-25, depending on how quickly they assimilate the Western half of the country) after their housing boom becomes a housing/lending crisis.</p><p><br /></p><p>Once the first wave is completed, steps are taken toward establishment of the second wave: Cashless, cash-based transactions. Think of it similar to Amex&#039;s campaign about &quot;social currency.&quot; People begin to think of products in terms of acquisition velocity. (Basically, how soon before I can own product X.) During this wave, products are marketed regarding security of transactions. &quot;Responsible parenting&quot; will involve creating pooled accounts for younger household members to spend from (like Paypal does now). Income earned would be directly routed into this account from whoever the child works for. This could be executed through a card, chip in a watch, phone, or basically any other RFID device.</p><p><br /></p><p>The final phase would be &quot;Joe V the Volcano&quot; where individuals effectively revert to a debt based purchasing system, but the debts are accrued perpetually. This leads to the &quot;company store&quot; mentality. After a generation or two of this, there&#039;s revolution, and you end up with cashless communism.</p><p><br /></p><p><br /></p><p>&nbsp;</p><p>Default occurs when an individual (or in this case, a sovereign nation) acknowledges an inability to perform on their debt. Revaluing currency is the primary example of non-performance. Since it costs A LOT of money to remove currency from circulation, print a new batch of currency, and implement the new currency into circulation, no single country would voluntarily do this without motivation of net lower obligations. This is why G-8 (and, by extension, G-20) countries fight like crazy to not get into situations which force them to revalue their currency. If the sovereigns that make up the global basket of currencies decide to change their currency values, it affects not only debt-holders, but anyone who uses international transactions.</p><p><br /></p><p>The default occurs because the new currency is completely unrelated to the previous currency. Effectively, the sovereign declares bankruptcy with issuance of a new currency. It&#039;s like a corporation issuing new stock and bonds. Previous issuances are either voided in their entirety or revalued at such a low level, that they are effectively ignored.</p><p><br /></p><p>[Edit: On a separate note, I&#039;m against doing away with the penny and keeping the nickel. Going from 0.5c to 1c is not nearly as extreme as going from 1c to 5c. If we are to do away with the penny, I maintain that we need to do away with the nickel, quarter, and dollar, also. Transactions would be in 2c/10c/50c/$2 coins, with bills being $10/$50/$200/$1000 bills. This would effectively create 1c variance, instead of 2c variance, thereby reducing variance by 75%.][/QUOTE]</p><p><br /></p>

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